Gangliosides appear to be important recognition molecules on the cell surface and have been implicated as receptors for certain bacterial toxins and viruses. Little is known, however, about the normal physiological role(s) of these plasma membrane components. We have developed several approaches and model sysems to address this issue. Fluorescent derivatives of ganglioside GM1 containing either rhodamine or Lucifer yellow CH were synthesized and shown to be as effective as native GM1 as receptors for cholera toxin. The fluorescent gangliosides were inserted into the plasma membrane of mouse and rat thymocytes and underwent capping when the cells were exposed to cholera toxin or anti-rhodamine antibodies, which are both multivalent. Cholera toxin also induced patching and capping of endogenous GM1 on the thymocyte surface. Exposure of rat thymocytes to the B or binding subunit of the toxin resulted in a proliferative response as measured by increased DNA synthesis. Even at 25 ng/M1, the B subunit was effective as a mitogen. Prior incubation of the B subunit with anticholera toxin antibodies blocked both its binding to and stimulation of the cells. The B subunit was effective as a mitogen. Prior incubation of the B subunit with anticholera toxin antibodies blocked both its binding to and stimulation of the cells. The B subunit was shown to be free of any adenylate cyclase-activating A subunit; and cyclic AMP inhibited mitogenesis. Thus, binding of several molecules of GM1 on the thymocyte surface by the B subunit leads to the transduction across the plasma membrane of a mitogenic signal.